To track housing recovery, follow the cash trail

In all, roughly two-thirds of the region's home buys in the past year have been all-cash deals, Realtor data and property records show.

By JOSH SALMANjosh.salman@heraldtribune.com

Michael Gatlin built his three-bedroom home in Flushing, Mich., with his own two hands.

At 3,000 square feet, it had plenty of room for his two young boys. The home sat on nearly an acre of land — or snow, depending on the season — and the kids took advantage of every inch.

Gatlin recalls summer days when his sons had two-a-day football practices and the entire team would come over at midday to swim in the pool while Gatlin grilled hot dogs.

His football players are grown now, living in different corners of the country. With them gone, Gatlin and his wife, Karen, thought about leaving, too.

"I put an awful lot of myself in that home — time, sweat and tears," Gatlin said from the hot tub in his new Punta Gorda condominium.

The Gatlins sold their mortgage-free home in Michigan last year for $250,000, using the proceeds to pay $180,000 cash for a waterfront abode in Punta Gorda Isles. They spend their time on the golf course, the softball diamond and the beach.

These empty nesters are among the roughly 76 million baby boomers — born between 1946 and 1964 — who are either retired or contemplating life beyond work and where they'd like to spend their final years. They are helping to steer Southwest Florida's housing recovery to its healthiest level in six years through sales once put on hold by the Great Recession.

What makes this recovery so different is that many of these buyers are paying cash for their slice of Southwest Florida. This, the result of stock market gains that pushed the Dow to a record last week, home appreciation and inheritance windfalls.

In all, roughly two-thirds of the region's home buys in the past year have been all-cash deals, Realtor data and property records show.

"The financial crisis and the housing crisis destroyed trillions of dollars in wealth, which had a direct impact on baby boomers and their retirement decisions," said Sean Snaith, an economist with the University of Central Florida. "But many are doing better now than they were pre-crisis."

The Gatlins were spurred to action by a shift in their fortunes.

Michael, 62, worked in radio doing voiceovers. His 56-year-old wife was a news anchor at the local ABC affiliate.

Michigan's housing downturn hit Flushing hard. The Gatlins' home lost at least 30 percent of its peak value, handcuffing their ability to relocate. But a local recovery that pushed up prices afforded them the opportunity to spend their retirement years in Southwest Florida.

'We had the means'

David Herald and his wife shared a similar vision.

The retired couple from Anderson, Ind., had been visiting friends in this area for years. During their most recent golf trip, back in November, they decided they couldn't go back without owning a piece of the region's real estate.

They tapped into savings, pension plans and inheritance to pull the trigger on a 1,500-square-foot home in Venice, paying $160,000 cash for the two-bed, two-bath residence.

"We just didn't want to borrow the money unless we absolutely had to," said Herald, a 65-year-old retired banker, whose wife, Caren, is a retired teacher. "We had the means to pay cash, so we did."

The pattern of northern home buyers migrating to Florida began a century ago. By the time the most recent boom peaked, some 1,000 people per day — predominantly the boomers — were moving to Florida.

The recession put a six-year chill on those migration patterns, but now that same demographic is on the move again.

"It's the same scenario of buyers I see every day," said Robert Goldman, a Realtor with Michael Saunders & Co. who also works as a real estate attorney and developer. "They're cashing in on an IRA or a home up north to come down because they feel the time is right to reach into our market."

Northern markets rise

Boomers and other buyers have been able to muster the cash for their new Florida homes, often by selling larger properties in the North to traditional move-up buyers — mostly growing families — that had also been waiting out the recession.

Although lending requirements remain stringent, the finances of many of those Northern households are in better shape than they were three years ago. Mortgage rates, meanwhile, have rarely been more attractive.

"Rents exceed the cost of owning a home, so a lot of these Northern families are going back into the market to buy," said Paul Mason, an economist with the University of North Florida. "Fannie and Freddie are still financing these outrageous loans, so people are taking advantage of that."

Much of the Midwest didn't suffer the same housing pain as states such as Florida, Arizona and California. Recent improvements in the job market nationally have also helped move-up buyers.

The rush of middle-class northerners raised Florida's population by about 235,000 last year. New York State alone lost 59,228 residents to the Sunshine State, while 38,658 Georgians swapped peaches for oranges, census figures show.

Those new residents are buying up real estate at a pace not seen since the crash. Existing-home sales across Southwest Florida rose 19 percent last year, the fourth-highest level on record and behind only the boom years of 2003, 2004 and 2005.

Most agents expect the climb to continue unabated as pending sales, which predict closings within the next 90 days, started off the year at the highest level in nine months. Others worry that the fierce demand, coupled with a shortage of new seller listings, might push prospective buyers elsewhere.

But many analysts believe population influx will ultimately keep the market moving.

"Population growth, primarily from the retiring baby boomer generation, is Florida's ace in the hole," said Jack McCabe, a housing consultant in Deerfield Beach.

Scott Shepard fits the model.

The 51-year-old real estate investor from Kalamazoo, Mich., initially bought a retirement condo for himself and his wife in downtown Sarasota nearly two years ago.

Wanting a little more space, they recently upgraded to a villa in The Meadows — paying $150,000 cash.

With his two children now grown, Shepard plays golf every morning he is in Sarasota, goes to Lido Beach at least twice a week and, as he likes to say, eats way too much food.

"We just decided to slow down a bit, and we always liked Sarasota," Shepard said.

'Tired of waiting'

Demand by cash buyers like the Shepards has also fueled new construction, creating jobs for an industry that dumped 350,000 laborers onto Florida's unemployment rolls during the crisis.

Builders in Sarasota and Manatee started work on 2,478 homes in 2012, a 30 percent increase from the year before. They sold 15 percent more homes, too, according to a report from data tracker Metrostudy.

At Bradenton-based Medallion Home, 80 percent of the builder's $80 million in sales last year were boomer buys.

"These baby boomers are finally able to sell a home up north and come down, and although they're not getting as much as they would have in 2005 or 2006, they're also not paying that much for their home here, either," Beruff said. "It's a trade-off. They're tired of waiting for the Florida lifestyle they want."

Randy Peterson was among those who no longer wanted to wait.

Thanks to a frugal lifestyle and gains on Wall Street, the 56-year-old retired software tester at Dell was able to buy a three-bedroom home in North Port last April for $115,000.

Like many others their age, the Petersons paid cash.

But neither Peterson nor his wife, Karen, are ready to completely sever ties with the North. They plan to keep their home near Minneapolis — where they still live half the year — at least for now.

"You just can't buy anything up there that's comparable for that price," said Peterson, who found Southwest Florida through a real estate auction show on television. "And I would say my timing couldn't have been much better."